Vitalik Buterin pointed out the risks of Ethereum's proof-of-stake mechanism.
The #Ethereum co-founder said that these risks neglect the goal of decentralizing the network.
Mr. Vitalik proposed solutions to address these risks. Vitalik Buterin, co-founder of Ethereum, identified potential risks in the #proof-of-stake mechanism of the L1 network and suggested ways to address them.
Buterin announced this in a blog post on October 20, explaining the main goals of The Scourge, a key phase of the Ethereum roadmap. According to Buterin, The Scourge is designed to minimize risks at the Ethereum mining level and mitigate the negative effects of excessive value extraction from users.
Buterin argues that centralization is one of the biggest challenges for the Ethereum network due to economic pressures: the dominance of large stablecoins naturally leads to smaller stablecoins picking from a larger pool to benefit from economies of scale. The company believes that.
This leads to an increased risk of 51% attacks, transaction censorship and other crises, Vitalik writes. In addition to the risk of centralization, there is also the risk of value extraction. A small group can acquire value that would otherwise go to Ethereum users.
The Ethereum co-founder identified two key areas where such risks exist. According to Buterin, large participants can use complex algorithms to extract the maximum extractable value (MEV) per block and earn more revenue than small participants, which can increase the incentive for centralization.
Buterin noted that "very large" participants can also avoid the inconvenience of #blockchain capital by issuing it to other market participants in the form of liquidity tokens (LSTs), shifting the risk to smaller participants.
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